On January 15, 2016, 123 signatories from 46 countries sent a letter calling on the Financial Action Task Force “to open a process to revise Recommendation 8” as it inaccurately states that “Non-profit organisations are particularly vulnerable” to abuse by terrorists. The letter notes that “Recommendation 8 fails to recognize that the vast majority of the millions of NPOs [nonprofit organizations] pursue legitimate charitable activities and that abuse for terrorist financing is rare. Indeed, the FATF Typologies Report, which only identified 102 case studies, acknowledged that cases of abuse are rare.”
A Jan. 30, 2014 study commissioned by the International Monetary Fund (IMF) found deficiencies in the evaluation process undertaken by the Financial Action Task Force (FATF). The FATF, a global intergovernmental organization that recommends anti-terrorist financing standards, evaluates government’s compliance with recommendations and publishes their ratings.
Non-profit organizations (NPOs) most at risk of abuse by terrorists appear to be those engaged in service activities and those that operate in close proximity to an active terrorist threat, according the Financial Action Task Force’s (FATF) 2014 report, Risk of Terrorist Abuse in Non-Profit Organisations. The goal of the typologies report, as it has come to be known, was to better understand the terrorist threat to the NPO sector as it relates to FATF Recommendation 8 (R8), which directs countries to ensure their laws are adequate to prevent abuse of NPOs by terrorists. NPOs provided extensive input for the report and much of it was incorporated. However, in a letter responding to the report the NPOs also cautioned against extrapolating the case studies to the nonprofit sector globally. Overall, the evidence shows that the incidence of terrorist abuse of NPOs is low.
An essay on FATF by the Charity & Security Network’s Kay Guinane is among the 27 guest contributions commissioned by CIVICUS for its State of Civil Society Report 2015 focus on civil society resourcing. “The International Anti-Terrorist Financing System’s Negative Effect on Civil Society Resources” examines the role of FATF in contributing to the global trend of restrictions on civil society. The essay describes the civil society response and advocacy campaigns on FATF, the successes to date and the work that lies ahead.
Foreign policy concerns regarding an “enabling environment” for civil society organizations (CSOs) are “frequently contradicted by the actions that states demand in the name of ‘counter-terrorism’,” according to an August 2015 report by Statewatch and the Human Security Collective, Countering terrorism or constraining civil society?
The Financial Action Task Force (FATF) is an intergovernmental policy making body that sets counter-terrorist financing and anti-money laundering (CFT/AML) standards used in nearly 180 countries. Jurisdictions undergoing the FATF’s compliance evaluation process are strongly encouraged to introduce specific laws and financial regulations, including Recommendation 8 (R8), on the operations and activities of non-profit organizations (NPOs), or risk serious economic consequences that could affect foreign aid, remittances, and trade.
Two important events surrounding the Financial Action Task Force (FATF) are expected in the coming months, both with a big impact on nonprofit organizations (NPOs).
Following the June FATF Plenary in Australia, the NPO sector can now expect a revision of the Recommendation 8 Interpretative Note (IN). At the same time, the FATF will begin its periodic evaluation of the U.S. in late 2015. The results of that evaluation will likely shape U.S. counterterrorism laws and policies affecting NPOs going forward.
After draft updates and significant input from the nonprofit organization (NPO) sector, the Financial Action Task Force (FATF) released its revised Best Practices Paper (BPP) in June 2015. The long-awaited revision incorporates almost all of the changes requested by NPOs with a new emphasis on taking a risk-based approach and avoiding a one-size-fits-all regulatory scheme.
This latest BPP revision, which offers guidance on FATF Recommendation 8, on laws relating to NPOs, states at its outset that FATF recognizes “the vital importance of the NPO community in providing charitable services around the world, as well as the difficulty of providing assistance to those in need, often in remote regions.” It also recognizes the efforts of NPOs to promote transparency in their work and “to prevent misuse of the sector by those wishing to support terrorist financing and terrorist organisations.”
The consultation and dialog between the Financial Action Task Force (FATF) and twenty civil society representatives from around the world that took place on April 24, 2013 in London was the first time the inter-governmental financial body has formally met with nonprofits (NPOs) to discuss its standards for governments anti-terrorist financing rules for NPOs and the need to protect nonprofits from both abuse by terrorists and the adverse impacts of poor governmental implementation of FATF’s NPO standards. After the meeting FATF issued a statement saying it “will continue working on this issue.” Civil society groups attending, including the Charity & Security Network, committed to an ongoing, positive role of input and dialog. Specific input into the update of the “Best Practices Paper on Combating the Abuse of Non-Profit Organisations” and the upcoming typologies study will be the focus of work going forward.
In February, the Charity & Security Network and the Human Security Collective sent recommendations to the Financial Action Task Force (FATF) calling for adherence to principles of effectiveness and proportionality as they review their Typologies of terrorist abuse of nonprofits. The FATF is an intergovernmental body that sets policy recommendations for governments to prevent money laundering and terrorist financing.